Question

You want to open a sushi bar 3 years from now, and you plan to save $7,000 per year, beginning immediately. You will make 3 deposits in an account that pays 5.2% interest. Under these assumptions, how much will you have 3 years from today

Answer 1

Answer:

You will have $23,261 in 3 years from today

Explanation:

Assuming that Interest is paid at the year end

Year 1

First Installment = $7,000

Interest for the year = $7,000*5.2% = $364

Carried forward balance = $7,000+$364 = $7,364

Year 2

Balance = $7,364

Second Installment = $7,000

Balance = $7,364+$7,000 = $14,364

Interest for the year = $14,364*5.2% = $747

Carried forward balance = $14,364+$747 = $15,111

Year 3

Balance = $15,111

Second Installment = $7,000

Balance = $15,111+$7,000 = $22,111

Interest for the year = $22,111*5.2% = $1,150

Carried forward balance = $22,111+$1,150 = $23,261